Tuesday, Nov. 9, 2004 | 10:58 a.m.
Putting the muscle of regulations behind comments made by Chairman Michael Powell in Las Vegas late last month, the Federal Communications Commission this morning barred states from regulating the emerging Voice-over Internet Protocol telephone technology.
The FCC ruled that the technology -- which uses broadband Internet connections to transmit telephone calls -- is an "interstate" service and not subject to state regulations.
Powell had argued, and the commission apparently agreed this morning, that a patchwork of regulations across the states would hamper the emergence of a technology that promises cheaper service to consumers.
"Calls are traveling across the country," Powell said following an October meeting of the Technology Business Alliance of Nevada. "What's more interstate than that?"
Federal control will allow for uniform regulation, removing barriers and keeping costs controlled for providers, he said, discounting the possibilities of an emerging dispute with state regulators. More important, Powell said, is that traditional regulations are quickly becoming obsolete amid technological changes.
"You can argue about a power struggle between the feds and the states, but the technology is changing how we look at things," Powell said. "It's not going to follow the patterns of traditional telephone service."
Charlie Bolle, policy analysis manager for the Public Utilities Commission of Nevada, said state regulators will take a hands-off approach following the ruling. He added, however, that the ruling will bring new questions.
While he said that no current legal challenge has been made, if the service is now interstate, there could be challenges that a portion of the local telephone loop, which supports broadband service, should also be declared interstate in nature, Bolle said. That, in turn, could lead to pressure to lower local telephone rates because less expense related to the loop is connected to local service.
"If they are going to take away all this revenue, they better take away some of the expense," Bolle said.
The FCC's ruling came in response to a petition brought by Vonage Holdings Corp.'s challenging of state regulation of VoIP service. Vonage, and a handful of other providers, offer VoIP service in the Las Vegas area.
Issues still loom over the new technology, which currently is not required to offer 911 emergency service or wiretapping access for federal law enforcement agencies. Service providers also are not required collect fees for the Universal Service Fund, which subsidizes telephone service in rural areas.
Powell and state regulators have urged VoIP providers to create their own guidelines for those issues before standards are imposed on them.
Bloomberg News reported that researcher In-Stat/MDR predicts VoIP revenue will increase to $776.9 million in two years from $34.5 million in 2003.
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